NAB's half-year profit down

National Australia Bank will report a net profit of A$2.05 billion when it publishes its half-year results on May 10. This is a fall of 16 per cent over the previous corresponding period, with the decline explained by the bank's reorganisation of its loss-making subsidiary in the UK.

NAB released a few unaudited headline numbers yesterday, ahead of the release of the financial report for the March half, so as to provide context for its report on its UK strategy review.

The group has taken a $1.1 billion charge for bad and doubtful debts. This is 14.4 per cent higher than the charge in the March half last year and can largely be laid at the door of its UK banking group and, to a lesser extent, its specialised assets group.

Cash earnings for the half-year were $2.8 billion - an increase of 5.7 per cent over the previous corresponding period.

The bank enjoyed a strong performance in wholesale banking.

NAB's chief executive, Cameron Clyne, said the restructuring of the UK banking business would not have any impact on the competitive position of the bank in Australia.

He said NAB would be able to maintain its position as price leader in the mortgage market among the Big Four banks. 

"Nothing in the UK has stopped us having a most significant improvement in our Australian business and that will not change," he said.

One thing that is changing is the momentum in the Australian business. NAB's rate of growth in the home loan market has dropped back to only marginally greater than system growth, data released yesterday by Australian Prudential Regulation Authority shows.

NAB continues to grow at around to twice system in household deposits, where the bank reported growth of 4.1 per cent in the March 2012 half compared with growth of 1.4 per cent during the previous half.